Facts of the Case

The assessee was subjected to reassessment proceedings initiated under Sections 147 and 148 of the Income-tax Act, 1961 on the ground that income had allegedly escaped assessment. A notice under Section 148 was issued, and reassessment proceedings culminated in additions to the income of the assessee.

The assessee challenged the proceedings on the ground that the notice initiating reassessment had been issued by an authority who did not possess valid jurisdiction over the case. The CIT(A) upheld the reassessment. The assessee filed an appeal before the ITAT, raising the jurisdictional issue.

Issues Involved

  1. Whether reassessment proceedings are valid when initiated by an officer lacking jurisdiction.
  2. Whether jurisdictional defects can be raised for the first time before the Tribunal.
  3. Validity of notice issued under Section 148 in such circumstances

Petitioner’s Arguments (Assessee)

  • The notice under Section 148 was issued by an Assessing Officer who did not have jurisdiction over the assessee.
  • Jurisdictional defect renders the entire reassessment void ab initio.
  • Such legal grounds can be raised at any stage, including before the ITAT.
  • Therefore, the reassessment proceedings were invalid.

Respondent’s Arguments (Revenue)

  • The reassessment proceedings were validly initiated.
  • The Assessing Officer had reason to believe that income had escaped assessment.
  • The order of the CIT(A) deserved to be upheld.

Court Order / Findings (ITAT Allahabad)

Jurisdiction to issue notice under Section 148 is fundamental to the validity of reassessment proceedings.

  • If notice is issued by an authority lacking jurisdiction, the proceedings are void.
  • Jurisdictional objections can be raised even for the first time before the Tribunal as they go to the root of the matter.

The Tribunal held that:

Reassessment initiated without proper jurisdiction is unsustainable in law.

Accordingly, the notice issued under Section 148 and the consequent reassessment order were quashed. The appeal of the assessee was allowed.

Important Clarification

  • Jurisdiction is a foundational requirement for valid assessment proceedings.
  • Defects relating to jurisdiction cannot be cured by participation of the assessee.
  • Jurisdictional issues can be raised at any stage of proceedings.
  • Invalid notice vitiates the entire reassessment process.

Link to download the order –

https://itat.gov.in/public/files/upload/1628140563-ita%20no.%20375%20of%202018%20Gaya%20Prasad%20Bajaj.pdf

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